Okay, so you're a pro at spending records, but now it's time to break out the big guns: budgets.

When you keep a spending record, you know how much you're…spending. When you keep a budget, you know how much your spending and how much you're earning. If you know how much money is coming in and how much money is going out, you'll probably be a little more careful with your dough.

There are a zillion apps for budgets, but if you're a low-tech type of Shmooper, you can make one with good old fashioned pen and paper. Before you start, here are few terms to know:

Income: Income is any money that's coming in, whether it's from work, investments, gifts, or even from selling your little sister's old troll collection.

Fixed Expenses: These are the things you have to pay for every month. Do you pay your own cell phone bill? Put that on there. How about your school lunch? Girl's gotta eat…so add that to the list, too.

Variable Expenses:: These are the things that change month-to-month. It might be money you spend on social stuff (if that's different each month) or the money you had to pay to fix your friend's guitar when you accidentally dropped it while pretending you were Nirvana.

Example Budget

Here's an example. Ted is saving up for a new fixed gear bike, and he's trying to see how many months it'll take him.

Hmmm. Ted's got a cash flow problem.

His total expenses are $185 ($130 + $55), but he's only bringing in $170. Yup, this guy's spending more than he earns—which means he's either going to run out before the end of the month or he'll have to borrow money his brother, which…no.

Bottom line: Ted either has to slash his spending or figure out a (legal) way to take in more money. Now that he sees where his money is going, it'll be easier to make a few changes. Maybe he can make his lunch at home more often. Maybe he can stream his music on Spotify instead of downloading it. With just those two changes, he could save, say, $35/month, meaning that he'll only spend $150/month. That means he's putting away $20/month, and depending on how used that fixed gear is, he might get his bike within just a few months.

Now here's the catch. A budget isn't meant to just show you how much you're making and how much you're spending—it's meant to help you stick to it every month. So after Ted's done with V1 of his budget, and decides to cut back on buying lunches and music, he'll see what happens. Over the next few months, the variable expenses might change a bit, but he can get an idea of how much he's willing to spend in that column. (Once you have 3-4 months worth of data, you can make a pretty good decision.)

Here's what his new budget might look like:

Savings = $20 ($170 – $25 – $115)

Now it's up to Ted to stick to his budget. If two weeks into the month, he's already spent $90 of his $115 on variable expenses, he'd better mow a few more lawns. That or not do anything "variable" for the second half of the month.

P.S. Depending on what you're responsible for buying in your family, you might want to start tracking "occasional" expenses, too. That's like the shampoo you have to buy once every six months or a once-yearly birthday gift for your best friend: you don't really need a monthly budget for it, but you should keep it in mind so you can make sure you have enough money coming in to cover all the bases.